Among those calling for more regulation in light of MF Global's collapse was the editorial page of the Saint Petersburg Times. In response, they printed my letter to the editor:
The fall of MF Global under Jon Corzine's stewardship couldn't be a worse argument for more government regulation of the financial industry. More financial regulations will be written by people who are connected, smart and savvy. These are people with experience in politics and the profession — people like Jon Corzine. If these folks make such poor decisions when they could suffer direct personal consequences, why should we expect any better when they are in government with no skin in the game?
Instead of a nanny-state bureaucracy that purports to manages our lives for us and protect the bankers from themselves for their own good, I have a better idea: loss of capital. If creditors want to finance the gambling of brokerages like MF Global on investments various and sundry, let them. And if they lose their shirts doing so, let them do that too. Given a steady diet of consequences, prudence will become a lot more commonplace.
Almost everyone touched a hot stove when they were a child. How many of us did it twice?